FTC demands endorsement info from Instagram 'influencers'

SAN FRANCISCO/WASHINGTON (Reuters) - U.S. truth-in-advertising enforcers have sent letters to supermodel Naomi Campbell, actresses Lindsay Lohan and Vanessa Hudgens and other celebrities asking whether they have paid deals to endorse products on the photo-sharing app Instagram.

The letters sent by the U.S. Federal Trade Commission to 21 people with large Instagram followings represent an escalation of the agency’s interest in so-called social media “influencers.”

Instagram, which is owned by Facebook Inc, has seen a sharp increase in recent years in promotions of products and services by famous people, often without disclosures of whether there was an endorsement deal.

Celebrities have talked up clothing brands, food, alcohol, spa treatments and a wide array of other items.

The letters demand responses to the FTC by Sept. 30 on whether the celebrities had any “material connection” to marketers whose wares they promoted on the app. The letters were sent on Sept. 6.

Reuters obtained copies of the letters after filing a Freedom of Information Act request with the government.

In May, the agency released dozens of letters it had sent to companies and stars giving them notice that they must tell fans about compensation for promotions on social media.

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Those are known within the agency as educational letters, whereas the recent ones are known as warning letters. For repeat offenders, the FTC could seek to impose fines.

In Campbell’s case, the FTC said an Instagram post of hers that showed three suitcases made by Globe-Trotter had “recently come to our attention.” The post had no disclosure about compensation, according to the letter.

If Campbell had a marketing deal, then she should tell the FTC what actions she is or will be taking to ensure disclosure, the letter says.

Campbell’s Instagram account has 4.3 million followers. Hudgens has the most of the group, at 26.7 million.

Instagram has tried to make it easier for people to label posts as paid promotions. In June, it said it would begin allowing people who are posting a picture to add a “paid partnership with” label that would appear above the picture.

Reporting by David Ingram in San Francisco and Diane Bartz in Washington; Additional reporting by Piya Sinha-Roy in Los Angeles; Editing by Jonathan Oatis